1 Stock Slated to Cash In on the SpaceX IPO

A SpaceX initial public offering (IPO) is likely to come sometime in June. That will be a monumental day for the stock market, as it has never seen an IPO quite like SpaceX, which is reportedly aiming for a valuation of $1.75 trillion to $2 trillion.

I'm intrigued by the IPO itself, but there are other companies that could cash in on it. One of them is Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). It owned about 6% of SpaceX as of the end of 2025, and if SpaceX reaches a $2 trillion market cap, that position would be worth around $120 billion.

Alphabet paid just $900 million for that stake back in 2015, so it will be a hugely profitable investment even if the market cap comes up somewhat short of SpaceX's most optimistic goals. But what will the tech giant do with its shares? That answer could be hidden in some guidance that Alphabet gave shareholders during its latest earnings call.

Image source: Getty Images.

Alphabet needs money for its AI infrastructure build-out

After a company debuts, there's normally a lockup period of 180 days that temporarily prevents early investors from selling. That way, the market isn't immediately flooded with excess liquidity that the company didn't plan on.

SpaceX is doing things a bit differently: It has set up a rolling share-release schedule for the first 180 days after it goes public. After it reports its Q2 results, insiders will be able to sell up to 20% of their shares. At set intervals after that, the fraction of their holdings that pre-IPO investors will be allowed to sell will increase. After the full 180 days, they'll be able to sell all of it. (Those early release dates don't apply to CEO Elon Musk -- he has to hold on for the full lockup period.)

So, Alphabet won't be able to fully liquidate its stake in the company until December at the earliest.

During its first-quarter conference call, Alphabet told shareholders to expect that its 2027 capital expenditures will "significantly increase" from 2026's levels. This year, it plans to spend between $180 billion and $190 billion on capex. Over the past 12 months, it has generated around $174 billion in cash from operations, so essentially all of its cash flow is being consumed by its data center build-out.

To fund a significant increase in 2027, management will need to either substantially increase its cash flow (and it did grow cash from operations by 27% in the second quarter), dip into the cash pile on its balance sheet, cut its dividend, dial down its share buybacks, issue debt, or find a new cash source -- which could be selling its SpaceX shares. My guess is that it will be a combination of all of these.

However, by selling SpaceX shares, Alphabet will be able to raise cash without cutting existing programs or issuing debt. That would make that strategy a major win for shareholders.

Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.